BusinessCoronavirus

Third of UK SMEs interested in pandemic-specific cover

More than one third (38.4%) of UK SMEs are interested in purchasing insurance that protects them from losses incurred from pandemics, according to latest GlobalData research.

GlobalData’s 2020 UK SME Insurance Survey showed lockdown measures have affected the operations of SMEs “considerably”, from adjusted operations to enable social distancing to a temporary total cease in trade.

The study found that many SMEs had incurred losses that fell outside of traditional business interruption policies.

According to the data and analytics company, the highest level of interest (75%) for insurance products to protect against such losses comes from medium-sized SMEs.

The study added that these SMEs would also be willing to pay the highest premium, up to £5,031 ($6,529) on average.

Overall, the data reported that the more an SME had experienced enforced closure and cease in trade during lockdown, the more likely they were to consider purchasing insurance.

Daniel Pearce, senior insurance analyst at GlobalData, said: “Should the insurance industry look to develop such a policy for the SME market the greatest level of uptake would be found in the small to medium sized business area.

“This is because the percentage of micro and sole trader sized businesses which had to cease operations completely during lockdown that would be interested does not exceed 50%.”

He added: “Combining this relatively low level of interest with the fact that they would be willing to pay the least in premiums, the market would likely be unsustainable for many insurers given the high level and cost of claims in times of pandemics.”

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